SILVER: Extreme Volatility Is Setting Up an Opportunity

Right now, there’s a lot to digest in world markets, economics, and politics. Dare I say, even more than usual…

Since Trump took office and has been imposing tariffs, silver and gold have rallied quite strongly. The broader stock markets, however, not so much, with the S&P down more than 14% since it peaked on Feb. 19^th.

Here’s an excellent chart by my colleague Jeff Clark that explains it all in one image:

On April 2^nd the US said they were imposing high reciprocal tariffs on essentially all their trading partners.

Trump has a point that many nations the US trades with have significantly high tariffs on US goods. At the same time, those countries are disadvantaged while the US reaps an outsized advantage from having the world’s de facto reserve currency, the US dollar.

So how have silver and gold reacted to all this?

Importantly, silver, gold, and several base metals have been specifically exempt. Silver and gold in particular are logical to leave off the tariff list as they are the oldest forms of money, something that would not make sense to tariff.

The table above shows precious metals have been performing exceptionally well in recent months.

In fact, I’ve been saying for several weeks that gold was looking overbought, and ripe for a correction. I also said that silver, while not overbought, would be pulled down in a gold selloff.

I believe a lot of the recent gains in silver and gold prices were due to concerns about tariffs being imposed on these metals. The news that they have been exempted could erase some of that built-in premium.

Silver, SIL, & SILJ

That’s what we are seeing happen now. The chart above shows silver is still up 10% after its recent correction. Interestingly, silver miners and junior silver miners have doubled the metal’s return since the start of the year.

I also think that silver did not rally to the same extent as gold in recent weeks due to its industrial component. Fears of global economic slowdown have weighed somewhat on the metal’s price. 

The concern is if/when we get a recession industrial demand for silver will soften. I think those fears are somewhat overblown and that demand would remain surprisingly robust thanks to solar, EV, and other green applications.

Silver is down about 6% since the sweeping tariff announcement. To some extent, I believe silver was signaling a correction in gold over the past couple of weeks. We’ll have to see what happens next.

I think we could get further weakness, with a potential bottom in silver around $28-$29. 

If that materializes, we will have the opportunity to buy many of the stocks in the Silver Stock Investor and Silver Advisor portfolios at very attractive prices.

My sense is that gold could correct further, perhaps to as low as $2,800 - $2,900 before the weakest hands sell. If instead, gold stays strong, then I’d expect silver to bounce back relatively soon.

I am not selling any of my holdings. Rather, I’m waiting intently for the opportunity to add and initiate new positions.

Stay tuned for my analysis of how this opportunity develops.